Markets without Capitalism

IFollowing the relational typology of Alan Page Fiske, there are four intersubjective modes which have existed cross-culturally and historically: equality matching (gift economy), authority ranking (feudal-type structures), market pricing, and communal shareholding (according to us: P2P). Societies have always been a mix, but it can be argued that historically we have seen a succession of dominant forms: the gift economy in the tribal era, authority ranking in feudalism, market pricing in capitalism, and my hypothesis is that communal shareholding forms may dominate in a future 'P2P-oriented era'.

But if they have always co-existed, it may be illusory to aim for a stateless and marketless society, rather, we should expect states and markets informed and dominated by P2P principles. A current example is fair trade, a form of market that aims to become independent of pure power relations by negotiating with both producers and consumers.

The open questions is therefore: can we have markets without the unsustainability of the capitalist format and its attendent biospheric destruction and social and psychic dislocation?

To answer this question, we can also look to theoreticians of the past, such as Sylvio Gesell, or to more contemporary thinkers such as Erik Olin Wright and the tradition of left libertarianism represented by Kevin Carson at Mutualist.org.

Silvio Gesell

Silvio Gesell is one of the main thinkers of this tradition. Gesell was briefly finance minister in Karl Liebknecht’s German-soviet republic and was greatly appreciated in his time by figures as Keynes and Martin Buber.

“In 1891 Silvio Gesell (1862-1930) a German-born entrepreneur living in Buenos Aires published a short booklet entitled Die Reformation im Münzwesen als Brücke zum sozialen Staat (Currency Reform as a Bridge to the Social State), the first of a series of pamphlets presenting a critical examination of the monetary system. It laid the foundation for an extensive body of writing inquiring into the causes of social problems and suggesting practical reform measures. His experiences during an economic crisis at that time in Argentina led Gesell to a viewpoint substantially at odds with the Marxist analysis of the social question: the exploitation of human labour does not have its origins in the private ownership of the means of production, but rather occurs primarily in the sphere of distribution due to structural defects in the monetary system. Like the ancient Greek philosopher Aristoteles, Gesell recognised money's contradictory dual role as a medium of exchange for facilitating economic activity on the one hand and as an instrument of power capable of dominating the market on the other hand. The starting point for Gesell's investigations was the following question: How could money's characteristics as a usurious instrument of power be overcome, without eliminating its positive qualities as a neutral medium of exchange ? He attributed this market-dominating power to two fundamental characteristics of conventional money: Firstly, money as a medium of demand is capable of being hoarded in contrast to human labor or goods and services on the supply side of the economic equation. It can be temporarily withheld from the market for speculative purposes without its holder being exposed to significant losses. Secondly, money enjoys the advantage of superior liquidity to goods and services. In other words, it can be put into use at almost any time or place and so enjoys a flexibility of deployment similar to that of a joker in a card game.

Gesell's theory of a Free Economy based on land and monetary reform may be understood a reaction both to the laissez-faire principle of classical liberalism as well as to Marxist visions of a centrally planned economy. It should not be thought of as a third way between capitalism or communism in the sense of subsequent "convergence theories" or so-called "mixed economy" models, i.e. capitalist market economies with global state supervision, but rather as an alternative beyond hitherto realized economic systems. In political terms it may be characterised as "a market economy without capitalism"…Gesell's alternative economic model is related to the liberal socialism of the cultural philosopher Gustav Landauer (1870-1919) who was also influenced by Proudhon and who for his part strongly influenced Martin Buber (1878-1965). There are intellectual parallels to the liberal socialism of the physician and sociologist Franz Oppenheimer (1861-1943) and to the social philosophy of Rudolf Steiner (1861-1925), the founder of the anthroposophic movement…An association called Christen für gerechte Wirtschaftsordnung (Christians for a Just Economic Order) promotes the study of land and monetary reform theories in the light of Jewish, Christian and Islamic religious doctrines critical of land speculation and the taking of interest. Margrit Kennedy, Helmut Creutz and other authors have examined the contemporary relevance of Gesell's economic model and tried to bring his ideas up to date." (http://userpage.fu-berlin.de/~roehrigw/onken/engl.htm)

Books to explore this tradition:

Silvio Gesell, The Natural Economic Order (translation by Philip Pye). London: Peter Owen Ltd., 1958. Dudley Dillard, Proudhon, Gesell and Keynes - An Investigation of some „Anti-Marxian-Socialist“ Antecedents of Keynes’ General Theory, University of California: Dr.-Thesis, 1949. Hackbarth Verlag St.Georgen/Germany 1997. ISBN 3-929741-14-8.

Leonard Wise, Great Money Reformers - Silvio Gesell, Arthur Kitson, Frederic Soddy. London: Holborn Publishing, 1949.

International Association for a Natural Economic Order, The Future of Economy – A Memoir for Economists. Lütjenburg: Fachverlag für Sozialökonomie, 1984/1989. (P.O. Box 1320, D-24319 Lütjenburg)

Margrit Kennedy, Interest and Inflation Free Money - Creating an Exchange Medium That Works for Everybody and Protects the Earth. Okemos/Michigan, 1995.

Eric Olin Wright's Market Socialism

Eric Olin Wright's explorations in 'Market Socialism'

Erik Olin Wright has written a series of remarkable essays and book.

Equal Shares: making market socialism work, by John Roemer, with contributions by Richard J. Arneson, Fred Block, Harry Brighouse, Michael Burawoy, Joshua Cohen, Nancy Folbre , Andrew Levine, Mieke Meurs, Louis Putterman, Joel Rogers, Debra Satz, Julius Sensat, William H. Simon, Frank Thompson, Thomas E. Weisskopf, Erik Olin Wright. Edited and introduced by Erik Olin Wright (Volume II, Real Utopias Project Series, London: Verso, 1996)

Recasting Egalitarianism: New Rules for Accountability and Equity in Markets, States and Communities, by Sam Bowles and Herbert Gintis with contributions by Daniel M. Hausman, John E. Roemer, Erik Olin Wright, Karl Ove Moene, Michael Wallerstein, Peter Skott David M. Gordon, Harry Brighouse, Elaine McCrate, Andrew Levine, Paula England, Steven N. Durlauf, Ugo Pagano, Michael R. Carter, and Karla Hoff. Edited and Introduced by Erik Olin Wright. (Volune III, Real Utopias Project Series, London: Verso, 1999)

Deepening Democracy: institutional innovations in empowered participatory governance, by Archon Fung and erik Olin Wright, with contributions by Rebecca Neaera Abers, Gianpaolo Baiocchi, Joshua Cohen, Patrick Heller, Bradley C. Karkkainen, Rebecca S. Krantz, Jane Mansbridge, Joel Rogers, Craig W. Thomas, and T.M. Thomas Isaac. (Volume IV of the Real Utopias Project Series, London, Verso, 2003)

Redesigning Distribution: basic income and stakeholder grants as cornerstones of a more egalitarian capitalism, by Bruce Ackerman, Ann Alstott and Philippe van Parijs, with contributions by Barbara Bergmann, Irv Garfinkle, Chien-Chung Huang , Wendy Naidich, Julian LeGrand, Carole Pateman, Guy Standing, Stuart White, and Erik Olin Wright (Volume V of the Real Utopias Project Series, London: Verso, in press 2005)

Discussion

Kevin Carson

Below two citations from Kevin Carson of Mutualist.org, who contrasts 'genuinely free market policies', from neoliberalism. Carson is part of the left-libertarian 'individualist anarchism' tradition.

Kevin sends us the following contextual info to link the two articles together:

"The only thing I would add, to flesh it out: the two pieces you quote from involved dismantling the infrastructure of state capitalism from the top down. The other side of the strategy is the kind of stuff I talked about in the "Building the Structure of the New Society Within the Shell of the Old" post--building counter-institutions from the bottom up to fill the void. It's a sort of dialectical strategy, with the agenda you quoted providing political cover and room for the alternative economy to grow.

A proposed market strategy against corporate capitalism

(Note that I find most of these proposals very sensible, with the exception of having tolls for the public highway infrastructure; this in effect limits the use of roads by those with financial means - Michel Bauwens)

Kevin Carson [1]:

"1) eliminate all corporate welfare spending, and translate this and all other budget savings (e.g., a radical scaling back of the drug war) into income tax cuts on the lowest brackets; eliminate all differential corporate income tax benefits, including deductions and credits, and lower the corporate income tax rate enough to make it revenue neutral;

2) eliminate all credit union regulations more restrictive than those on ordinary commercial banks; eliminate capitalization requirements and other entry barriers for banks engaged solely in providing secured loans against property;

3) fund federal highways and airports entirely with tolls and other user-fees, with absolutely no subsidies from general revenues, and no use of eminent domain;

4) repeal Taft-Hartley, all legislation like the Railway Labor Relations Act which restrains specific categories of workers from striking, and all legal restrictions on minority unionism in workplaces without a certified union;

5) repeal all food libel laws, liberalize or eliminate restrictions on alternative medicine, and radically scale back or eliminate the so-called "intellectual property" of the agribusiness, infotainment, and drug industries; radically scale back or eliminate patents in general;

6) devolve control of federal land to states, counties and municipalities, with those governments replacing much or all taxation of income and sales with severance and resource extraction fees as a source of revenue;

7) restore the common law of liability to its full vigor, in preference to the regulatory state, as a way of forcing pollutors and other corporate malefactors to internalize the costs they impose on society; make civil damages directly proportional to the harm done;

8) at the state level, drastically scale back the drug war and translate the savings into eliminating the sales tax and cutting income taxes on the lower brackets; at the state and local levels, eliminate all corporate tax incentives, public spending on industrial parks, and the like, and reduce income taxes on the lower brackets accordingly; at the local level, shift all current taxes on buildings and improvements and personal property, and all sales taxes, onto the unimproved site value of land;

9) at the local level, accept some portion of taxes in LETS notes and other alternative currencies;

10) eliminate all local zoning restrictions on mixed-use development like neighborhood grocers in subdivisions, and walkup apartments downtown; fund all urban freeway systems with tolls; require real estate developers to pay the full cost of extending roads and utilities to new subdivisions, instead of passing on the cost to tax- and ratepayers in old neighborhoods." (http://mutualist.blogspot.com/2006/04/strategic-green-libertarian-alliance.html)

Free-Market Policies for Development

Kevin Carson[2]:

"So what kinds of genuinely free market policies could the West undertake to promote prosperity in the Third World? Here are a few, for starters:

1. Western governments should support genuine property rights in the land. That is, they should stop siding with the Latifundistas and other landed oligarchies against land reform, and support strengthening of the peasantry's traditional tenure rights in the land. The history of American foreign policy in the Third World, unfortunately, is pretty accurately symbolized by its intervention on behalf of United Fruit Company in Guatemala: decades of collusion between landlord and general oligarchies, American agribusiness interests, and the U.S. national security establishment. Murray Rothbard, a libertarian considerably less prone than the Catoids to confuse "property rights" and the "free market" with plutocratic interests, acknowledged that most "property rights" in the Third World were really what Thomas Hodgskin called "artificial" and Albert Jay Nock called "law-made" (see "Rothbard on Feudalism and Land Reform") Such property claims, descended largely from state grants of land under colonial regimes, came at the expense of the legitimate property rights of the peasants who had appropriated the land through their own labor.

One reason Third World labor is willing to work in sweatshops as their "best available alternative" is that they've been forcibly deprived of any better alternative. If the countless land expropriations of recent decades had not taken place, if the property rights of peasant cultivators had been upheld against quasi-feudal property rights based on state land grants to absentee landlords, if hundreds of millions of now landless laborers still had independent access to subsistence farming, the bargaining position of labor against Wal-Mart's suppliers would be considerably different. As was the case with the enclosures in Britain, employers find it a lot harder to get cheap labor when workers have independent access to the means of production. Some factual questions were recently raised about Ellennita Muetze Hellmer's JLS article "Establishing Government Accountability in the Anti-Sweatshop Campaign," but that shouldn't obscure the validity of her central point: it's disingenuous for sweatshop employers to congratulate themselves on providing crutches to destitute Third World laborers when they've colluded with government in breaking their legs in the first place.

2. Repudiate international "intellectual property" accords. The central motivation behind the GATT intellectual property regime was to permanently lock in the collective monopoly of advanced production technology by TNCs, and impede the rise of independent competition in the Third World. It would, as Martin Khor wrote, "effectively prevent the diffusion of technology to the Third World, and would tremendously increase monopoly royalties of the TNCs whilst curbing the potential development of Third World technology." The developed world pushed particularly hard to protect industries relying on or producing "generic technologies," and to restrict diffusion of "dual use" technologies. Not to put too fine a point on it, the aim of international "intellectual property" law is to lock the Third World into a permanent status of global sweatshop, hewers of wood and drawers of water for Western capital [Martin Khor, The Uruguay Round and Third World Sovereignty (Penang, Malaysia: Third World Network, 1990); Chakravarthi Raghavan, Recolonization: GATT, the Uruguay Round & the Third World (Penang, Malaysia: Third World Network, 1990)].

3. Replace the phony neoliberal version of "privatization" with the real thing--that is, privatization based on respect for the property rights of the taxpayers whose sweat equity is embodied in the assets. Murray Rothbard argued that state property should be treated as "unowned" in the Lockean sense, and subject to homesteading by those actually mixing their labor with it ["Confiscation and the Homestead Principle," Libertarian Forum June 15, 1969]. In the case of public utilities, that means organizing them either as producers' co-ops under the control of workers' syndicates, or consumer cooperatives owned by the ratepayers. All state property and services should, in some similar fashion, be returned directly to the people. The state has no right to sell, to its favored cronies, property that was originally paid for with money looted from the taxpayers.

4. More generally, the U.S. should abandon the Palmerstonian model of fake "free trade" for the genuine article, as conceived by Cobden. According to Oliver MacDonough ["The Anti-Imperialism of Free Trade," The Economic History Review (Second Series) 14:3 (1962)], the Palmerstonian system was utterly loathed by the Cobdenites. The sort of thing Cobden objected to included the "dispatch of a fleet 'to protect British interests' in Portugal," to the "loan-mongering and debt-collecting operations in which our Government engaged either as principal or agent," and generally, all "intervention on behalf of British creditors overseas" and all forcible opening of foreign markets. Cobden opposed, above all, the confusion of "free trade" with "mere increases of commerce or with the forcible 'opening up' of markets."

Real free trade policy, on the other hand, doesn't require multilateral bureaucracies like the WTO. It simply requires eliminating U.S. trade barriers, and allowing Americans to trade or invest anywhere they want to in the world on whatever terms they can negotiate--provided that they also internalize all costs and risks of doing business overseas, without the U.S. government subsidizing their operating costs, insuring them against nationalization by hostile governments, and suchlike. It's that simple." (http://mutualist.blogspot.com/2006/05/vulgar-libertarianism-watch-part-xvii.html)

Roderick Long

Semantic Difficulties with the use of concepts like Markets and Capitalism

Roderick Long [3], cited by Kevin Carson:

"Libertarians sometimes debate whether the "real" or "authentic" meaning of a term like "capitalism" is (a) the free market, or (b) government favoritism toward business, or (c) the separation between labor and ownership, an arrangement neutral between the other two; Austrians tend to use the term in the first sense; individualist anarchists in the Tuckerite tradition tend to use it in the second or third. But in ordinary usage, I fear, it actually stands for an amalgamation of incompatible meanings.

Now I think the word "capitalism," if used with the meaning most people give it, is a package-deal term. By "capitalism" most people mean neither the free market simpliciter nor the prevailing neomercantilist system simpliciter. Rather, what most people mean by "capitalism" is this free-market system that currently prevails in the western world. In short, the term "capitalism" as generally used conceals an assumption that the prevailing system is a free market. And since the prevailing system is in fact one of government favoritism toward business, the ordinary use of the term carries with it the assumption that the free market is government favoritism toward business.

And similar considerations apply to the term "socialism." Most people don't mean by "socialism" anything so precise as state ownership of the means of production; instead they really mean something more like "the opposite of capitalism." Then if "capitalism" is a package-deal term, so is "socialism" — it conveys opposition to the free market, and opposition to neomercantilism, as though these were one and the same.

And that, I suggest, is the function of these terms: to blur the distinction between the free market and neomercantilism. Such confusion prevails because it works to the advantage of the statist establishment: those who want to defend the free market can more easily be seduced into defending neomercantilism, and those who want to combat neomercantilism can more easily be seduced into combating the free market. Either way, the state remains secure." (http://mutualist.blogspot.com/2006/04/roderick-long-rothbard-memorial.html)

The following quote is alo of interest, to disentangle libertarian and left approaches to the market, capitalism, and the state:

"Ever since libertarians and leftists went their separate ways back in the 19th century, libertarians have specialized in understanding governmental forms and mechanisms of oppression, and the benefits of competitive, for-profit forms of voluntary association; while leftists have specialized in understanding non-governmental forms and mechanisms of oppression, and the benefits of cooperative, not-for-profit forms of voluntary association." (http://mises.org/story/2099#9)

More Information

To investigate: the conception of Fernand Braudel and Manuel de Landa on anti-markets

The reform movement of Natural Capitalism

Market anarchism: "Francis Tandy’s 1896 book Voluntary Socialism is one of the classics of market anarchism." See at http://praxeology.net/FDT-VS.htm

The blog on Uncapitalism, at http://uncapitalist.com/blog/about.php

Our entries on Monetary Reform and Taxation Reform

See also our entry on Self Managed Market Socialism